At present, the Higher Education Funding Council for Wales regulates and provides funding for higher education, whilst the Welsh Government does so for the other tertiary education sectors. The committee acknowledges that the new commission created by the legislation will combine these activities into one body to try and achieve a coherent learning pathway, and we hope this will achieve better education outcomes for learners. However, we are disappointed that the savings and benefits of the Bill have not been quantified in the RIA, particularly as this work is intended to be undertaken in the next six to nine months. It is unclear why the Minister didn’t carry out this work prior to the Bill being introduced. We recommend that a fuller explanation of the benefits of this legislation is provided and when these benefits are expected to be delivered. We heard what the Minister said today and the committee will review any information that he will present to us.

The new commission will be an arm's-length body with wide-ranging powers, with a significant budget in excess of £500 million per year. The costs of establishing the commission are based on a 10-year period, with the RIA stating that the benefits of the Bill are most likely to be realised in the medium to long term. During scrutiny, the committee identified the three largest financial risks associated with this Bill, which are the location of the commission, the number of commission staff, and the IT costs. It's very concerning that a plus or minus 30 per cent variance figure has been allowed for costs in the Bill, which could mean a difference of £60 million, from £198.5 million to up to £258 million, over the 10-year period. We find this variance to be completely unacceptable. Whilst the Minister said that the 30 per cent range does not apply to all items of cost, no effort has been made to differentiate where this range applies, therefore it is difficult for us to understand where the key risks really lie.

The Minister has confirmed that a strategy and implementation group with stakeholders from across the sector will be established to work through some of these issues, but it's disappointing that the cost element has not been further progressed. We recommend that the Minister undertakes further work on the costs and updates the RIA to demonstrate, for clarity, to which costs the plus or minus 30 per cent variance applies.

In relation to the location of the commission, we recognise that the pandemic has created a more difficult environment to choose a suitable location, given the future uncertainties in ways of working post pandemic, as well as the volatility of the property market and availability of suitable premises. However, given its interdependency with other costs, the committee recommends that further work should be undertaken on a location strategy and its financial impact as a matter of priority.

Staff costs are the biggest expense for the new commission, totalling just under £13 million a year from 2023-24. Of that £13 million, the Minister confirmed that £3.3 million is a new cost, whilst the remaining £9.7 million relates to existing HEFCW and Welsh Government staffing. The Minister subsequently provided a further breakdown of costs, which I thank him for, however this information should have been available in the RIA on introduction. The committee recommends that the Minister provides information on the strategy and implementation group's consideration of the commission's location and staffing numbers, including details of any financial impacts arising from the group's work. 

The largest element of the transitional costs is £4.9 million for IT. This is based on the assumption that, between April this year and September next year, eight IT consultants will be hired, at a cost of £900 per day, to assist in transferring HEFCW systems and data to the new commission. We note the Minister's view that some IT costs would be incurred regardless of the reform, for upgrading existing systems. We therefore recommend that the Minister provides further information relating to the financial impact of using IT consultants.